تم إضافة السؤال من قبل
VENKITARAMAN KRISHNA MOORTHY VRINDAVAN
, Project Execution Manager & Accounts Manager , ALI INTERNATIONAL TRADING EST.
تاريخ النشر: 2014/09/20
The cost of funds used for financing a business. Cost of capital depends on the mode of financing used – it refers to the cost of equity if the business is financed solely through equity, or to the cost of debt if it is financed solely through debt. Many companies use a combination of debt and equity to finance their businesses, and for such companies, their overall cost of capital is derived from a weighted average of all capital sources, widely known as the weighted average cost of capital (WACC). Since the cost of capital represents a hurdle rate that a company must overcome before it can generate value, it is extensively used in the capital budgeting process to determine whether the company should proceed with a project.